Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 113.041 | EURUSD 1.20296 | AUDUSD 0.78625 | NZDUSD 0.71677 | USDCAD 1.24136 | USDCHF 0.97467 | GBPUSD 1.35663 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.20524 | 1.2012

USDJPY                 113.275 | 113.014

GBPUSD               1.35859 | 1.35522

AUDUSD              0.78727 | 0.78356

USDCHF               0.97629 | 0.97369

USDCAD               1.24139 | 1.23784

NZDUSD               0.71845 | 0.71567

EURGBP               0.88770 | 0.88630

EURCHF                1.17466 | 1.17202

EURJPY                 136.327 | 136.01

For today

• EUR: A slow start to the week with the market rising slowly from the opening 1.2030 levels and pushing in early Tokyo to just above the 1.2050 levels before slipping slowly lower through the rest of the session, the move through the opening levels saw some minor stops triggered and the market testing to the 1.2010 level, downside bids through the 1.2000 areas with possible weak stops on a move through the 1.1980 opening a test to the 1.1950 levels as the 200 dma breaks and possibly only tentative bids before opening the market to further downside losses with better bids likely into the 1.1900 levels with possibly larger stops on a move through the 1.1880 areas, for the moment it would seem that ECB officials are balancing the weakening inflation against a rising Euro so expect more commentary along the way, Topside offers light through to the 1.2050 areas and once through the market is likely to increase in offers with 1.2080-1.2100 likely to be strongly resistant to further upside gains however, a break through the level has the potential to open the Euro to larger gains.
• GBP: A very similar session for Cable with the market rising from the opening levels around the 1.3560 level and pushing through into early Tokyo testing the 1.3585 levels before slipping slowly lower through the balance of the session into the grey hours testing the 1.3555 areas. Topside offers likely to be strong again on a move into the 1.3600 areas with weak stops above the 1.3620-30 areas however, the 1.3650-60 area is the level from earlier in the year to contend with possibly strong profit taking in the area and weak stops joined by break out orders opening a quick test to the 1.3700 level and very little except sentimental levels standing in the way until just above the 1.3800 level. Downside bids light into the 1.3500 levels where stronger bids are likely to appear, a move through the level will likely see some weak stops however stronger congestive bids around the 1.3450 protect the downside for the moment and any push through the level is likely to see bids continuing into 1.3400 levels.
• JPY: A slow rise through the session with the market moving from the low opening around the 113.05 areas to push through to the 113.15 areas and into Tokyo, after a few hours pause the market again started to rally higher pushing slowly through the 113.25 level before holding into the grey hours, Topside offers into the 113.50 levels congestive in nature however, a move through the area will likely see increasing offers the closer the market pushes to the 113.90-114.00 areas with a break through the level finding further congestive offers mixed with weak stops and the market needing to break cleanly above the 114.50 areas to open the topside to further gains, downside bids light back through the 113.00 levels with congestive bids then likely to take over on a push back to the stronger 112.50 areas and several months of congestion around that area, a break below the strong 112.00 areas will likely see strong stops appearing and a quick run lower before finding similar bids into the 111.00 areas.
• AUD: The Oz opened towards the highs opening around the 0.7865 areas and testing above the 0.7870 areas and repeating the push higher into the Tokyo session, the market then drifted from the highs with weekend news beginning to tell and slipping slowly back to test below the 0.7850 areas in early Morning Tokyo, the market pushed through the level but with little impetus to test the 0.7835 level before rallying a little into the grey hours. Topside offers into the 0.7880-0.7900 levels are yest to be tested in the Oz with strong offers likely before opening to weak congestion on a run to the 0.7950 areas and possibly congestive offers increasing as the market moves towards the 80 cent level as with the 79 cent level. Downside bids light through the 78 cent areas with weak stops on a move through the 0.7775 areas and then stronger bids as the market tests the 0.7730-00 area with strong stops likely below that area.

Overnight News

AUD:

20k investors can’t afford their mortgages repayments after banks switch to principle and interest

GBP:

Visa reports slump in consumer spending in 2017 as a whole for the first time in 5yrs

May set to appoint a cabinet minister for no deal Tel

AUD:

Australia forecasts 20% iron ore price drop in 2018 as China demand eases

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

07:00     EUR        German Factory Orders M/M Nov C 0.00% | P 0.50%

08:15     CHF        CPI M/M Dec C -0.10% | P -0.10%

08:15     CHF        CPI Y/Y Dec C 0.80% | P 0.80%

09:30     EUR        Eurozone Sentix Investor Confidence Jan C 31.3 | P 31.1

10:00     EUR        Eurozone Retail Sales M/M Nov C 1.30% | P -1.10%

10:00     EUR        Eurozone Consumer Confidence Dec (F) C 0.5 | P 0.5

10:00     EUR        Eurozone Economic Confidence Dec C 114.8 | P 114.6

10:00     EUR        Eurozone Business Climate Indicator Dec C 1.5 | P 1.49

10:00     EUR        Eurozone Industrial Confidence Dec C 8.4 | P 8.2

10:00     EUR        Eurozone Services Confidence Dec C 16.5 | P 16.3

15:30     CAD       BOC Business Outlook Survey

Weekend News

CNY:

China’s foreign reserves extend gains amid capital curbs

EUR:

ECB’s Weidmann comments in interview with Spain’s El Mundo

Weidmann: clear end for bond buying program justified

Eurozone inflation eases but policy makers confident – WSJ

NZD:

Auckland posts smallest rise in house prices in 5 years Barfoot

USD:

White house doesn’t see need for faster Fed hikes due to tax cuts

Fed’s Mester warns of limits to crisis response capabilities

San Francisco Fed Williams paints a benign picture of Fed rate hikes, strong US economy

Harry Hindsight

• EUR: A quiet run to the NFP with the market holding in a tight 1.2065-80 through the Asian session with the market dipping on early London selling falling back on inflationary numbers to the 1.2045 level, the market held around the 1.2050 areas through to the US employment numbers with the market with unemployment rate flat at 4.10% and the hourly earnings in line with expectations and a spike higher before reading between the lines and a larger Trade Balance and weaker NFP the market rallied from its then 1.2045 low areas to just below the 1.2085 area to make the high for the day before dropping back quickly to push towards the 1.2020 level, some small gyrations around the ISM numbers but contained for the most part before rising steadily through to the 120.50 level and then drifting to the close around the 1.2030 level.
• GBP: Cable rose from the 1.3550 areas to push slowly through the Asian session above the 1.3575 level, the move into the London session saw the market dropping back through to early morning as domestic commentary on reshuffles and so on played on the market with the Cable dipping to the 1.3525 levels in quiet trading overall, before starting a slow steady recovery through to the 1.3555 into the NFP, minor move up to make the highs above the 1.3580 level before dropping back down to the starting point and basing quietly on the 1.3545 level through to the end of London, the run to the close was a light rally higher pushing through to the 1.3570 areas before holding the 1.3565 area to the close.
• JPY: Opening quietly the market based around the 112.75 level through to early morning in Tokyo before starting a steady rise through the Asian session and into the London session, the market ran through to early London pushing to the 113.25 levels before holding steady through to the NYK session testing to the 113.30 level on the release before dipping quickly back to the 113.00 areas and holding in a choppy period around the 113.25-10 level before slipping to the close pushing towards the 113.00 levels.
• AUD: Opening around the 0.7865 level holding through into the Tokyo session before dropping back on the negative trade balance testing initially to the 0.7855 area and then after a short pause dropping again to the 0.7845 area and then slowly rising to the first stopping point, the move into the grey hours saw the market again slipping lower pushing to the 0.7835 level and then holding through the London session quietly, NYK session saw the Oz rally quickly to the 0.7870 area before dropping back again, the move through to the close saw the market extending the highs in a slow rally through to the 0.7875 level and then dipping into the close, overall Oz was contained for the most part and the weaker trade balance seems to have been taken in its stride.

Yesterday’s premiership results

JPY         Monetary Base Y/Y Dec A 11.20% | P 13.20%

GBP       BRC Shop Price Index Y/Y Dec A -0.60% | P -0.10%

AUD       Trade Balance (AUD) Nov A -0.63B | C 0.55B | P 0.11B | P -0.30B

EUR        German Retail Sales M/M Nov A 2.30% | C 1.00% | P -1.20%

EUR        Eurozone Retail PMI Dec A 53 | P 52.4

EUR        Eurozone PPI M/M Nov A 0.60% | C 0.30% | P 0.40%

EUR        Eurozone PPI Y/Y Nov A 2.80% | C 2.50% | P 2.50%

EUR        Eurozone CPI Core Y/Y Dec (A) A 0.90% | C 1.00% | P 0.90%

EUR        Eurozone CPI Estimate Y/Y Dec A 1.40% | C 1.40% | P 1.50%

CAD       International Merchandise Trade (CAD) Nov A -2.5B | C -1.3B | P -1.5B | R -1.6B

CAD       Net Change in Employment Dec A 78.6K | C 0.0K | P 79.5K

CAD       Unemployment Rate Dec A 5.70% | C 6.00% | P 5.90%

USD       Change in Non-farm Payrolls Dec A 148K | C 189K | P 228K | R 252K

USD       Unemployment Rate Dec A 4.10% | C 4.10% | P 4.10%

USD       Average Hourly Earnings M/M Dec A 0.30% | C 0.30% | P 0.20%

USD       Trade Balance Nov A -50.5B | C -48.1B | P -48.7B | R -48.9B

CAD       Ivey PMI Dec A 49.3 | C 62.2 | P 63

USD       ISM Non-Manufacturing/Services Composite Dec A 55.9 | C 57.6 | P 57.4

USD       Factory Orders Nov A 1.30% | C 1.40% | P -0.10% | R 0.40%

Stay lucky

Andy

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